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Authorities in the Swiss city of Geneva have raided the offices of HSBC in connection with a money laundering probe into the British bank.

The city's public prosecutor searched HSBC's lakeside office on Wednesday after opening a criminal inquiry into allegations of aggravated money laundering, the second investigation to hit the bank this week.

Europe's largest lender is in regulators' sights after details about how its Swiss private bank allegedly helped wealthy clients evade millions of dollars in taxes were leaked to the media and published last week.

The cache of files, made public in the so-called SwissLeaks case, claimed HSBC's Swiss private banking arm helped clients in more than 200 countries evade taxes on accounts containing $119bn.

The files provided details on more than 100,000 HSBC clients, including people targeted by US sanctions, suspected arms dealers and drug traffickers.

The Geneva prosecutor said he had launched an investigation following the allegations and could extend it to individuals.

"A search is currently under way in the premises of the bank, led by Attorney General Olivier Jornot and the prosecutor Yves Bertossa," the prosecutor said in a statement.

Anyone found guilty of such crimes could face up to five years behind bars as well as large fines, Geneva judicial authorities told the AFP news agency.

HSBC has apologised to customers and investors over the previous failings of its Swiss business and has said the operation has since been overhauled.

However, Britain's financial watchdog said on Monday that it would investigate HSBC and focus on its current behaviour.

UK commentator resigns

On Tuesday, the chief political commentator for the London-based Daily Telegraph newspaper resigned over the publication's coverage of the HSBC scandal, alleging that it was part of an effort to downplay critical coverage of the bank to preserve lucrative advertising contracts.

Peter Oborne accused the newspaper of carrying out a form of "fraud on its readers" by burying coverage of leaks, which have drawn massive attention from the rest of Britain's media.

Oborne has called for an independent probe into the Telegraph's editorial guidelines, according to another UK newspaper, the Guardian, which published the SwissLeaks.

HSBC's Swiss unit has been in the spotlight since 2008 when a former IT employee fled Geneva with files allegedly showing evidence of tax evasion by clients.

French tax authorities later passed the information to tax authorities around the world.

US officials opened a criminal investigation and French magistrates put the bank under formal investigation last November. Tax authorities in Belgium, Austria and Argentina are also looking at the allegations.

According to Swiss law, a bank can be held responsible for "aggravated money laundering" if it does not take all the necessary measures to ensure such infractions do not take place within its institution.

Source: Agencies